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13-July-2016

Spanish fashion brand Zara posted its slowest sales growth in India during the year ended March, indicating that its novelty factor may be waning as consumers shift to global rivals such as H&M and Gap, which entered the country last year.

Inditex Trent, the joint venture between Zara brand owner Inditex and Tata Group's retail arm Trent, clocked a 17 per cent sales growth to Rs 842.5 crore during FY16, Trent said in its annual report on Tuesday.

A year ago, its revenue increased 24 per cent to Rs 721 crore. Zara's sales growth has been tapering off after stellar performances following its entry into India in 2010. It posted a profit in the first year of operations and doubled sales every two years.

The joint venture plans to open more Zara stores in India over the next three to four years in the major cities, after two additions last year took its total outlet count to 18, the report said. "The primary challenge to faster expansion is the availability of high quality retail spaces, which can be expected to generate reasonable sales throughput," Trent said.

As the world's second most-populated country, India is an attractive market for US and European brands, especially with youngsters increasingly embracing westernstyle clothing.

Zara, owned by Inditex, the world's largest clothing retailer, is facing competition from similarly priced, fashion rivals including Gap, H&M and Aeropostale, which entered India last year.

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